A Texas property is under contract and scheduled to close on March 31. On March 28, a severe hailstorm damages the roof. The damage is estimated at $15,000. Under Paragraph 14 (Casualty Loss) of the TREC contract, the buyer:
Correct Answer
D) May terminate the contract and receive the earnest money back, or proceed and receive insurance proceeds or credit
Under Paragraph 14, if the property suffers casualty loss before closing, the buyer may choose to either terminate the contract (and receive the earnest money back) or proceed with the purchase and receive any insurance proceeds or a credit for the damage.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Contingencies are conditions written into a real estate contract that must be met before the transaction can close. If a contingency is not satisfied, the buyer can typically cancel the contract without penalty.
Contract termination occurs when a contract is ended or discharged, releasing both parties from their obligations. A contract can be terminated through performance, mutual agreement, operation of law, or breach.
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
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